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A recession – or even the threat of one – often puts marketers on the defensive. Our budgets are seemingly discretionary, at least compared to product development and manufacturing. There is a misconception that our results, unlike sales, do not directly generate revenue. So it’s not surprising that many marketers start cutting corners when the economic weather looks bad.
Bad move. In fact, the smart move is to switch to offense. However, you need to do this correctly. Putting more dollars into advertising in hopes of increasing the number of marketing-qualified leads won’t pass the increasingly nervous CEOs and boards of directors.
Budget cuts are coming; deal with it
Let’s make one thing clear: Marketing budgets are cut. Based on my conversations with marketers and Twilio’s internal research, I expect marketing budgets to shrink by an average of 25% over the next year – much more for some companies and less for the fortunate ones.
For the past 12 years, many marketers have lived in a cash-rich environment where they had to grow at all costs. That’s now changing, as the changing economic conditions are driving and leading executives to return to the company’s fundamentals: margins, profits, and long-term customer value. According to Twilio’s Growth Report, which surveyed 1,300 marketing and customer experience professionals in the UK and US, 93% of companies are starting to plan for a recession. Cuts in the marketing budget are therefore inevitable.
It’s worth remembering that companies that cut their marketing budgets too much will eventually lose ground when moving forward is most important. This is especially true in digital media, where it is difficult to attract the attention of new customers. Indeed, marketing can help brands stand out when competition gets tougher online.
But it may take a while for that argument to start to weigh in the boardroom. What should a resourceful marketer do in the meantime? Here are four smart moves you can make to make an impact in a tough economic climate.
1. Re-engage customers
It is cheaper and easier to reconnect with customers who have drifted than to find and convert brand new customers. First, you have all their contact details and a lot of data about their preferences, purchase history and interests. For another thing, unless you’ve done something to scare them away, they’re probably already inclined to contact you. You just have to give them a good reason to get back in touch. Indeed, the Growth Report found that 67% of companies prioritize keeping current customers happy over acquiring new ones.
For example, a multi-party marketplace has re-enthralled millions of dormant buyers of handmade gifts and vintage items. It has done this by unifying its customer profiles and using those profiles to micro-segment its audience. It used to depend on building broad campaigns that took one to three days to launch. But with this new user-centric approach, the company can now personalize each message in real time.
2. Build cross-selling opportunities
Don’t wait for customers to drift away. Look for opportunities to help them discover adjacent product lines they might like. For example, a clothing company we work with engages customers of one of their brands with offers from a related brand. This allows the company to increase its share of the wallet (receiving more dollars from each customer) while also diversifying its brand value among those consumers.
3. Embrace first-hand data
By now you’ve heard that third-party cookies are disappearing; they are already blocked in Firefox and Apple Safari and will no longer be available in Google Chrome in 2024. That may seem like a distant milestone, but make no mistake: the sooner you start building your own customer data platform, the better prepared you’ll be for this transition. It can take 12 to 18 months to roll out a robust platform, so now is the time to get started.
As you plan for this shift, make sure you don’t just collect rich data directly from consumers, but do so with their explicit consent.
4. Use data to increase LTV
Once you have robust, first-hand data, you can start using it to identify your best customers. Offer them tailored experiences, find out what else engages them, and upsell/cross-sell additional products and services. In short, find ways to make your best customers even better by delivering real-time value and personalization. Do this and you’ll generate additional revenue without spending a penny on customer acquisition costs (CAC).
This strategy increases the lifetime value (LTV) of your customers. When LTV rises and CAC falls – and marketing is responsible – it’s not only good for your budget, but also for your career. Marketers striving for operational and executive positions will win with smart marketing strategies that improve business fundamentals.
Build resilience into your game plan
The economy is uncertain and cuts in marketing budgets are imminent. But savvy marketers are not waiting for their budget to be taken away. It’s important to create a plan that allows you to do more with less – and in marketing that means leveraging consensus-based customer data and being ready to use it in a variety of ways. use, depending on the situation.
Customer data is basically straw until you turn it into gold, which means collecting, identifying, cleaning and integrating it into a growth-oriented strategy. Don’t wait to make the switch. The time to go on the offensive is now.
Katrina Wong is VP of Segment Marketing at Twilio.
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